Charles Hugh Smith

At readers' request, I've prepared a biography. I am not confident this is the right length or has the desired information; the whole project veers uncomfortably close to PR. On the other hand, who wants to read a boring bio? I am reminded of the "Peanuts" comic character Lucy, who once issued this terse biographical summary: "A man was born, he lived, he died." All undoubtedly true, but somewhat lacking in narrative.

Articles by Charles Hugh Smith

Capital garners the gains, and labor’s share continues eroding. That’s the story of the 21st century.
The middle class, virtually by definition, is not prepared for downward mobility. A systemic, semi-permanent decline in the standard of living isn’t part of the implicit social contract that’s been internalized by the middle class virtually everywhere:living standards are only supposed to rise. Any decline is temporary.
Downward mobility is the key context in the gilets jaunes “yellow vest” movement in France. Taxes and prices rise inexorably while wages/pensions stagnate. The only possible outcome of this structural asymmetry is a decline in the standard of living.
This structural decline in the standard of living

The value of declaring the entire nation in or out of recession is limited.
Recessions are typically only visible to statisticians long after the fact, but they are often visible in real time on the ground: business volume drops, people stop buying houses and vehicles, restaurants that were jammed are suddenly sepulchral and so on.
There are well-known canaries in the coal mine in terms of indicators. These include building permits, architectural bookings, air travel, and auto and home sales.
Home sales are already dropping in most areas, and vehicle sales are softening. Airlines and tourism may continue on for awhile as people have already booked their travel, but the slowdown in other spending can be remarkably

What’s scarce in a world awash in free content and nearly infinite entertainment content?
After 3,701 posts (from May 2005 to the present), here are my observations of the Alternative Media from the muddy trenches.
It’s increasingly difficult to make a living creating content outside the corporate matrix. The share of advert revenues paid to content creators / publishers has declined precipitously, shadow banning has narrowed search and social media exposure and the expansion of free content and competing subscription-based publishing has made subscription services an increasingly tough sell.

George Orwell
The most effective ways to silence critics and skeptics is to 1) de-monetize their sites / platforms and 2)

The fact that lies and cover stories are now the official norm only makes us love our servitude with greater devotion.
We can summarize the current era in one sentence: truth is what we hide, self-serving cover stories are what we sell. Jean-Claude Juncker’s famous quote captures the essence of the era: “When it becomes serious, you have to lie.”
And when does it become serious? When the hidden facts of the matter might be revealed to the general public. Given the regularity of vast troves of well-hidden data being made public by whistleblowers and white-hat hackers, it’s basically serious all the time now, and hence the official default everywhere is: truth is what we hide, self-serving cover stories are what we

This systemic vulnerability is largely invisible, and so the inevitable contagion will surprise most observers and participants.
The conventional definition of a Bear is someone who expects stocks to decline. For those of us who are bearish on fake fixes, that definition doesn’t apply: we aren’t making guesses about future market gyrations (rip-your-face-off rallies, dizziness-inducing drops, boring melt-ups, etc.), we’re focused on the impossibility of reforming or fixing a broken economic system.
Many observers confuse creative destruction with profoundly structural problems. The technocrat perspective views the creative disruption of existing business models by the digital-driven 4th Industrial Revolution as the

A productive national Strategy would systemically decentralize power and capital rather than concentrate both in the hands of a self-serving elite.
If you ask America’s well-paid punditry to define America’s National Strategy, you’ll most likely get the UNESCO version: America’s national strategy is to support a Liberal Global Order (LGO) of global cooperation on the environment, trade, etc. and the encouragement of democracy, a liberal order that benefits all by providing global security and avenues for cooperation.
This sounds good, but it overlooks the Endless Wars ™ and global meddling that characterize America’s realpolitik dependence on force, which it applies with a ruthlessness born of America’s peculiar

For all we know, the panic selling is Wall Street’s way of forcing the Fed’s hand: stop with the rates increases already or Mr. Market expires.
Markets everywhere are gagging on something: they’re sagging, crashing, imploding, blowing up, dropping and generally exhibiting signs of distress.
Does the market need a Heimlich Maneuver? Is there some way to expel whatever’s choking the market?
So what’s choking the market? There are a number of possibilities: somewhere near the top of most observers’ lists are: rising interest rates, weakening credit growth in China, the slowing of China’s economy, trade wars, European uncertainties, currently centered around Italy but by no means restricted to Italy, Japan’s slowing

Does any of this make sense? No. But it’s so darn profitable to the oligarchy, it’s difficult to escape debt-serfdom and tax-donkey servitude.
We rarely ask “does this make any sense?” of things that are widely accepted as beneficial – or if not beneficial, “the way it is,” i.e. it can’t be changed by non-elite (i.e. the bottom 99.5%) efforts.
Of the vast array of things that don’t make sense, let’s start with borrowing from future income to spend more today. This is of course the entire foundation of consumer economies such as the U.S.: the number of households which buy a car or house with cash is near-zero, unless 1) they just sold a bubble-valuation house and paid off their mortgage in escrow or 2) they earned

Other governments are keenly interested in following China’s lead.
I’ve been pondering the excellent 1964 history of the Southern Song Dynasty’s capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government’s unprecedented “Social Credit Score” system, which I addressed in Kafka’s Nightmare Emerges: China’s “Social Credit Score”.
The scope of this surveillance is so broad and pervasive that it borders on science fiction: a recent Western visitor noted that train passengers hear an automated warning on certain lines, in Mandarin and English, that their compliance with regulations will be observed and may be punished via a poor social

Isn’t it obvious that repeating the policies of 2009 won’t be enough to save the system from a long-delayed reset?
2019 is shaping up to be the year in which all the policies that worked in the past will no longer work. As we all know, the Global Financial Meltdown / recession of 2008-09 was halted by the coordinated policies of the major central banks, which lowered interest rates to near-zero, bought trillions of dollars of bonds and iffy assets such as mortgage-backed securities, and issued unlimited lines of credit to insolvent banks, i.e. unlimited liquidity.
Central governments which could do so went on a borrowing / spending binge to boost demand in their economies, and pursued other policies designed to bring

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%.
Despite the rah-rah about the “ownership society” and the best economy ever, the sobering reality is very few Americans are able to get ahead, i.e. build real financial security via meaningful, secure assets which can be passed on to their children.
As I’ve often discussed here, only the top 10% of American households are getting ahead in both income and wealth, and most of the gains of these 12 million households are concentrated in the top 1% (1.2 million households). (see wealth chart below).
Why are so few Americans able to get ahead? there are three core reasons:
1.

The problem isn’t polarization; the problem is neither flavor of the status quo is actually solving any of the nation’s most pressing system problems.
As I write this at 5 pm (Left Coast) November 6, the election results are unknown. While various media are trumpeting this as “the most important election of our lives,” the less eyeball-catching, emotion-triggering reality is this election is nothing but another distraction. No matter who “wins,” none of our systemic problems will be addressed, much less solved.
Does either party have the will or coherent grasp of what’s broken to fix America’s healthcare mess? No. The Democrats’ “solution” is to take the bloated, ineffective Medicare system that incentivizes blatant

An unknown but likely staggeringly large percentage of small business owners in the U.S. are an inch away from calling it quits and closing shop.
Timothy Leary famously coined the definitive 60s counterculture phrase, “Turn on, tune in, drop out” in 1966. (According to Wikipedia, In a 1988 interview with Neil Strauss, Leary said the slogan was “given to him” by Marshall McLuhan during a lunch in New York City.)
An updated version of the slogan might be: Turn Off, Tune Out, Drop Out: turn off mobile phones, screens, etc.; tune out Corporate Media, social media, propaganda, official and unofficial, and drop out of the status quo economy and society.
Dropping out of a broken, dysfunctional status quo in terminal decline

Rebuilding social capital and social connectedness is not something that can be done by governments or corporations.
As the mid-term elections are widely viewed as a referendum of sorts, let’s set aside politics and ask, what’s behind the erosion of our civil society? That civil society in the U.S. and elsewhere is fraying is self-evident. It isn’t just the rise of us-or-them confrontations and all-or-nothing ideological extremes; social bonds between people are weakening.
There are many probable causes: addictive technologies such as social media and smartphones; chronic economic stress, greater mobility and a host of more subtle factors.
One such factor is the erosion of community and its replacement with state

The desire to improve our social standing is natural. What’s unnatural is the toxicity of doing so through social media.
It seems self-evident that the divisiveness that characterizes this juncture of American history is manifesting profound social and economic disorders that have little to do with politics. In this context, social media isn’t the source of the fire, it’s more like the gasoline that’s being tossed on top of the dry timber.
My thinking on social media’s toxic nature has been heavily influenced by long conversations with my friend GFB, who persuaded me that my initial dismissal of Facebook’s influence was misplaced.
Our views of all media, traditional, alternative and social, is of course heavily

The value of local control and local capital far exceed the pathetic “savings” reaped from shoddy commoditized goods.
What do we make of an economy in which a handful of bubblicious urban areas are magnets for jobs and capital while rural communities have been hollowed out? The short answer is that this progression of urbanization has been one of the core dynamics of civilization for thousands of years: opportunities are greater in cities, and so people move from rural areas with few opportunities to cities with greater opportunities.
But that’s not the only dynamic hollowing out America’s rural communities: globalization plays a key role, too. Rural economies can rarely muster economies of scale that enable globally

Nobody dares discuss it openly for fear of triggering a panic, but there aren’t enough lifeboats for everyone.

There’s no shortage of explanations on the whys and wherefores of the US stock market’s recent swoon / swan-dive / plummet. Here’s a few of the many credible explanations:
the economy has reached peak earnings so there’s no fundamentals-driven upside left;
bond yields are now high enough to dampen enthusiasm for inherently risky stocks;
central banks curtailing / ending their quantitative easing programs have reduced liquidity in the financial system;
US markets are catching up to the rest of the world’s market slump;
the US market is overvalued by just about any measure;
uncertainty about the mid-term

Falling asset inflation plus rising cost inflation equals stagflation.
Inflation is a funny thing: we feel it virtually every day, but we’re told it doesn’t exist—the official inflation rate is around 2.5% over the past few years, a little higher when energy prices are going up and a little lower when energy prices are going down.

Historically, 2.5% is about as low as inflation gets in a mass-consumption economy like the U.S. that depends on the constant expansion of credit.

Inflation, consumer prices for US 1970-2010 – Click to enlarge

But even 2.5% annually can add up if wages are stagnant. According to the Bureau of Labor Statistics (BLS), what cost $1 in January 2009 now costs

Humiliation and fear of a catastrophic decline in status foment mutiny and rebellion.
I recently finished The Bounty: The True Story of the Mutiny on the Bounty, a painstakingly researched history of the mutiny, but with a focus on how the story was shaped by influential families after the fact to save the life of one mutineer, Peter Haywood, and salvage the reputation of the leader, Fletcher Christian, via a carefully orchestrated character assassination of Captain Bligh.
The author, Caroline Alexander, summarized the ambiguous incitement of mutiny by Christian thusly: “What caused the mutiny on the Bounty? The seductions of Tahiti, Bligh’s harsh tongue – perhaps. But more compellingly, a night of drinking and a

The key here is the gains generated by owning US-denominated assets as the USD appreciates.
Is the Greatest Bull Market Ever finally ending? One straightforward approach to is to follow the money, i.e. global capital flows: assets that attract positive global capital flows will continue rising if demand for the assets exceeds supply, and assets that are being liquidated as capital flees the asset class (i.e. negative capital flows) will decline in price.
Global capital flows are difficult to track for a number of reasons. A significant percentage of global mobile capital is held in secretive offshore tax havens and “shadow banking,” and tracking global corporate capital flows is not easy. Capital held in precious

Here’s the difference between a recession and a depression: you can’t get blood from a stone, or make an insolvent entity solvent with more debt.
There are two basic differences between a recession and a depression:
1. Duration: a recession typically lasts between 6 and 18 months, while a depression drags on for years or even decades, often masked by official propaganda as “slow growth” or “stagnation.”
2. The basic dynamic: recessions are business / credit cycle events that wring out the excesses of credit expansion (i.e. lending to unqualified borrowers who subsequently default) and mal-investment in low-yield, high-risk speculations and projects that only made financial sense in the euphoria of bubble psychology

By the standards of previous generations, the middle class has been stripmined of income, assets and purchasing power.
What does it take to be middle class nowadays? Defining the middle class is a parlor game, with most of the punditry referring to income brackets as the defining factor.
People tend to self-report that they belong to the middle class based on income, but income is not the key metric: 12 other factors are more telling measures of middle class membership than income.
In Why the Middle Class Is Doomed (April 17, 2012) I listed five minimum threshold characteristics of membership in the middle class:
1. Meaningful healthcare insurance (i.e. not phantom insurance with $5,000 deductibles, etc.) and life

The way forward is to replace the entire system of reserve currencies with a transparent free-for-all of all kinds of currencies.
Over the years, I’ve endeavored to illuminate the arcane dynamics of global currencies by discussing Triffin’s Paradox, which explains the conflicting dual roles of national currencies that also act as global reserve currencies, i.e. currencies that other nations use for global payments, loans and foreign exchange reserves.
The four currencies that are considered global are the US dollar (USD), the euro, the Japanese yen and China’s RMB (yuan). The percentage of use in each of the three categories of demand for the reserve currencies–payments, loans and foreign exchange reserves–are

The defaults and currency crises in the periphery will then move into the core.
It’s funny how unintended consequences so rarely turn out to be good. The intended consequences of central banks’ unprecedented tsunami of stimulus (quantitative easing, super-low interest rates and easy credit / abundant liquidity) over the past decade were:
1. Save the banks by giving them credit-money at near-zero interest that they could loan out at higher rates. Savers were thrown under the bus by super-low rates (hope you like your $1 in interest on $1,000…) but hey, bankers contribute millions to politicos and savers don’t matter.
2. Bring demand forward by encouraging consumers to buy on credit now. Nothing like 0% financing to

We’re living in a fantasy, folks. Bubbles pop, period.
The nice thing about the “wealth” generated by bubbles is it’s so easy: no need to earn wealth the hard way, by scrimping and saving capital and investing it wisely. Just sit back and let central bank stimulus push assets higher.
The problem with bubble “wealth” is it’s like an addictive narcotic: now our entire pension system, public and private, is dependent on the current bubbles in stocks, real estate, junk bonds and other risk assets never popping.
But a funny thing eventually happens to financial bubbles: they all pop. And when the current bubbles pop, they will gut pension reserves, projections and promises.
Take a look at the chart below of taxpayer

It isn’t easy to add new subway lines or new highways, and so “solutions” don’t really exist.
If there’s one thing Americans can still agree on, it’s that America needs to spend more on infrastructure which is visibly falling apart in many places. This capital investment creates jobs and satisfies everyone’s ideological requirements: investment in public infrastructure helps enterprises, local governments and residents.
Unfortunately, it isn’t a simple as spending another trillion dollars. Spending money is the easy part; actually fixing what’s broken isn’t just a matter of spending more money.
The poster child for spending trillions on infrastructure and getting very little value is Japan, which has funneled much

Few conventional-media commentators are willing or able to discuss these factors in the labor shortage / declining participation trends.
Is there a labor shortage in the U.S.? Employers are shouting “yes.” Economists keep looking for wage increases as evidence of a labor shortage, and since wage increases are still relatively modest, the argument that there are severe labor shortages in parts of the U.S. is unpersuasive to many conventional economists.
But if we look at “we’re hiring” signs and billboards, it’s clear employers are having trouble filling available positions. Longtime correspondent Harvey D. recently submitted this list of billboards advertising job openings in South Carolina:
“Here’s a sample of

Want to understand the full scope of neofeudalism in America? Follow the money and the power and privilege it buys.
The repugnant reality of class privilege in America is captured by the phrase date rape: the violence of forced, non-consensual sex is abhorrent rape when committed by commoner criminals, but implicitly excusable date rape when committed by a member of America’s privileged elite.
Compare the effectiveness of excuses offered by privileged elites (we were both drinking, I didn’t hear her say no, etc.) when offered in court by less privileged males on trial for rape. The privileged elite is acquitted or given a wrist-slap while the commoner gets 20 years in prison.
This implicit privilege to non-consensual

The nation is failing as a direct consequence of these four catastrophic policies.
It’s admittedly a tough task to select the four most disastrous presidential policies of the past 60 years, given the great multitude to choose from. Here are my top choices and the reasons why I selected these from a wealth of policy disasters.
1. President Johnson’s expansion of the Vietnam War, which set the stage for President Nixon’s continuation of that disastrous war for an additional five years.
For those who missed the 30-minute lecture on the Vietnam War in history class, Johnson took a low-intensity guerrilla war in South Vietnam in which the U.S. was supporting a corrupt and venal South Vietnamese elite and expanded it into

Credit bubbles are not engines of sustainable employment, they are only engines of malinvestment and wealth destruction on a grand scale.
We all know the Status Quo’s response to the global financial meltdown of 2008 has been a travesty of a mockery of a sham–smoke and mirrors, flimsy facades of “recovery,” simulacrum “reforms,” serial bubble-blowing and politically expedient can-kicking, all based on borrowing and printing trillions of dollars, yen, euros and yuan, quatloos, etc.
So when will the travesty of a mockery of a sham finally come to an end? Probably around 2022-25, with a few global crises and “saves” along the way to break up the monotony of devolution. The foundation of this forecast is this chart I